Palo Alto Enterprises has £300,000 in cash. They wish to invest the money in Treasury bills at 8% rate of return and use the returns to pay dividends to shareholders after a year. Alternatively, they can pay a dividend and allow shareholders to make the investment. In perfect capital markets and no transaction costs and tax rates, which option will shareholders prefer? A. immediate cash dividend B. dividend after one year C. prefer half from each source D. indifferent between options
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8. Palo Alto Enterprises has £300,000 in cash. They wish to invest the money in Treasury bills at 8%
A. |
immediate cash dividend |
|
B. |
dividend after one year |
|
C. |
prefer half from each source |
|
D. |
indifferent between options |
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